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"While the headlines screamed that online sales grew dramatically and in-store sales declined in the holiday season's early days, the more accurate account is that retailers' omnichannel sales increased. Shoppers now use multiple channels - online, in-store and especially mobile-to research and then make their purchases. In addition, surveys indicate that shoppers are delaying their spending until later in the season, which bodes well for brick-and-mortar retail."

-Melina Cordero, Americas Head of Retail Research

Record-high online sales: Consumers made $12.75 billion in online retail purchases over the five-day period from Thanksgiving Day to Cyber Monday, according to a study by Adobe. This represents a 14.7% increase over the same period last year. Black Friday registered the greatest growth in online sales, rising nearly a quarter (21.6%) above 2015’s level. This growth highlights the consumer trend towards online retail, but not necessarily away from brick-and-mortar shopping. The majority of these online purchases were made from established retailers with brick-and-mortar locations, according to the International Council of Shopping Centers (ICSC). Many of the nation’s largest physical retailers invested heavily in expanding their e-commerce offer in 2016, which both facilitated holiday online spending growth and helped them capture more of it.

Brick-and-mortar performance strong in prime assets: Despite online sales growth, many brick-and-mortar segments also reported traffic and sales gains. Many retailers contend that e-commerce is helping raise in-store conversion rates. Among malls, ICSC reports that a higher proportion of U.S. adults shopped in physical stores over the Thanksgiving and Black Friday period this year compared with last year (57% vs. 51%). Affirming the trend, several major mall operators reported year-over-year traffic and sales increases across their portfolios. However, this growth is increasingly concentrated in prime assets like super-regional malls, while many Class B and C centers face flat or declining traffic—a trend seen throughout the year. Among retailers, many brands found that conversion rates were actually higher than in previous years, as consumers increasingly leverage online channels to browse before purchasing in-store. This raises the proportion of in-store customers who actually spend and offsets flat or declining traffic trends.

Consumers turn to mobile: A record 40% of online sales on Thanksgiving Day occurred on mobile devices (smartphones and tablets), according to Adobe. Of the $771 million spent through the mobile channel, 67.5% occurred through smartphones and 32.5% on tablets. The data affirms consumers increasing reliance on mobile as a key tool for shopping, browsing and purchasing. More importantly, mobile is seen as a key complement for brick-and-mortar retail; surveys indicate consumers prefer to combine mobile with online and brick-and-mortar visits as they price compare and test products before purchasing. As this trend continues, retailers need to focus on better integrating mobile and leveraging its rise to complement and drive store traffic.

Customers have more to spend: Though online sales increased significantly year-over-year, consumers reported that there is more to come. Separate surveys by both Adobe and the NRF found that spending per consumer was slightly less than in 2015. Though this is partly attributed to this year’s heavy promotional environment, it is also because consumers are waiting for better deals closer to the holiday. NRF found that fewer consumers felt they’d finished their holiday shopping (9% this year vs 11% in 2015) and almost a quarter (23%) said they hadn’t even begun (up from 19% in 2015). This suggests consumers are poised to spend later this season than in past years, which can benefit brick-and-mortar retailers as delivery windows close on online orders in the final days before Christmas.